The Great Hall was built around 1390 as the Guild of Corpus Christi; the Guild was a group of businessmen and gentry who had religious connections. The Guildhall was used for banquet festivals and as a home for a priest who prayed for the souls of Guild members in the nearby St Martin's Church. The Corporation of Leicester bought the Guildhall by the end of the 14th century.

During the English Civil War, the Mayor and corporation received a demand from Prince Rupert for £2000. The decision was made at the Guildhall to offer a loan of £500 and appealed to King Charles I. In May 1645, the King attempted to divert attention away from Oxford and positioned an army of 6,000 men outside the city walls on 29 May 1645. Again, essential decisions regarding the city’s fate were decided in the Guildhall. On 30 May 1645, the Royalist Army made demand after demand for the town, which played for time. In the end, Prince Rupert attacked at 3:00 p.m. The city walls were breached, and the Guildhall and St Martins defenders made the last stand. The Royalists then entered the Guildhall, looting the town's archives and mace and seal. The Royalist victory was reversed a couple of weeks later with the defeat at Naseby.

Records also show that entertainment expenses were paid for wine and beer for Oliver Cromwell. Although this does not prove Oliver Cromwell stayed at the Guildhall, he probably visited several times—the coat of arms of King Charles I can be seen today inside the Mayor's Parlour.

Room at Leicester in which Shakespeare is said to have acted before Queen Elizabeth by Alice Mary Hobson It is reputed that William Shakespeare appeared here. In recognition, the television company Maya Vision brought the Royal Shakespeare Company to perform at the Guildhall as part of its 2003 series for the BBC, In Search of Shakespeare, written and narrated by the historian Michael Wood. Part of the Shakespeare legend is that Shakespeare first came across the tale of King Leir whilst appearing at the Guildhall, which inspired him to write his play, King Lear. However, there is no evidence to support this, although the legend of King Leir is associated with Leicester.

The Guildhall was the place of the third oldest public library in England. It was established in 1632 when the town library was moved into the east wing of the building. The books in the collection include the New Testament in Greek from the 15th century. Most books are on display in the present time.

Leicester's first police force had its station in the Guildhall in 1836. There were police cells on the ground floor of the east wing.

The Guildhall was retained in use until quite late. Not until 1876 did the Corporation move to the new Leicester Town Hall. Apart from the police station, it was later used as a school. However, the building was becoming increasingly dilapidated, and by the 1920s, there were plans to demolish the building. After the intervention of the Leicestershire Archaeological and Historical Society, the council began restoration work on the building, finishing it in 1926, when the Guildhall was opened as a museum.